This Policy Statement confirms general standards and communication rules for the payment services and e-money sectors following our Consultation Paper CP18/21.
In July 2018, we consulted (CP18/21) on proposals to apply existing rules and guidance that clarify our expectations on conduct and communication across the payment services and e-money sectors. We also proposed new standards for the communication of payment services and e-money involving a currency conversion.
This Policy Statement confirms that we are:
- extending the application of our Principles for Businesses to the provision of payment services and the issuance of e-money by certain payment services providers and e-money issuers
- extending the application of certain communication rules and guidance in the Banking Conduct of Business Sourcebook, Chapter 2 (BCOBS 2) to communications with payment service and e-money customers
- making rules and guidance on the communication and marketing of currency transfer services, applicable to payment services and the issuance of e-money involving a currency conversion
Firms will have to comply with our new rules from 1 August 2019.
Addressing differences in regulatory requirements
Our Principles for Businesses and communication rules in BCOBS 2 do not currently apply to payment institutions (PIs), electronic money institutions (EMIs) or registered account information service providers (RAISPs). Neither do they apply (in most cases) to credit institutions providing payment services which are not connected to their activities regulated under the Financial Services and Markets Act 2000 (FSMA).
We have new rulemaking powers that allow us to extend rules made under FSMA so that those rules also apply to activities regulated under the Payment Services Regulations (PSRs 2017) and Electronic Money Regulations (EMRs 2011).
Our new rules ensure that all firms in these sectors are subject to the fundamental obligations we expect regulated firms to comply with. They will equip us to respond better to the evolving payments landscape and to intervene effectively in the market if necessary.
Addressing misleading advertising and marketing of services
Our new rules also address our concerns about consumer harm as a result of some firms’ communication practices. This includes misleading advertising and marketing of services. The new rules require all payment service providers (PSPs) and e-money issuers to communicate in ways which are fair, clear and not misleading when providing services (including currency transfer services) to customers. This will reduce harm by enabling customers to make more effective decisions and obtain services that better fit their needs.
Addressing misleading communication of currency transfer services
We have seen harm where providers of currency transfer services (payment services or issuance of e-money involving a currency conversion) have issued potentially misleading communications to customers. We have made rules stopping providers promoting unachievable exchange rates to consumers and making unsubstantiated claims about the cost of their service in comparison with other providers. These new rules will enable us to take more direct and efficient action in relation to such practices.